A reality of modern international commercial disputes - whether in the municipal courts or in arbitration - is that an increasing percentage of such disputes conclude by settlement, before a full trial or hearing on the merits. While statistics vary and are not always reliable, it is fair to say that particularly in international commercial arbitration, the pressure and desire to settle a dispute before it is allowed to reach its full term and conclusion are becoming more intense and not less so. 1

Whether as counsel or as arbitrator, it behoves the practitioner of international arbitration to be aware of the issues surrounding the settlement of arbitral proceedings at different stages of the dispute. The following brief discussion focuses on the ICC Rules (both the 1988 version still relevant to many proceedings and the current version which came into effect on 1 January 1998). It also includes illustrative references to other institutional rules and to certain major bodies of municipal law which address the issue of settlement in arbitration.

I. Practical considerations relating to settlement

A. Motivations for settlement

Avoidance of costs and curtailing of prolonged proceedings are but two of many reasons for seeking settlement, and perhaps the ones which come most readily to mind. Other possible driving forces in actual practice include:

(i) eliminating the risks inherent in an arbitrator- or judge-decided outcome;

(ii) leaving open the possibility of amicable and fruitful future relations with the opposing party;

(iii) maximizing the chances of avoiding exchange of evidence and keeping the dispute confidential;

(iv) avoiding the casting of blame internally within an enterprise; and

(v) enhancing the likelihood of at least partial monetary recovery through amicable means, as opposed to compulsory enforcement. [Page23:]

In actual practice, the methods of achieving settlement in the context of arbitration proceedings differ substantially between and among sets of arbitration rules and local procedural laws. Indeed, as in the case of arbitration proceedings culminating in a final award on the merits, so in the case of proceedings interrupted or terminated by settlement there may be a complex interplay of different considerations.

These may include the applicable arbitration rules, the substantive and procedural laws relevant to the validity of the agreement, and the laws applicable to enforcement should a party not comply with the agreement after all. Moreover, there can be important questions regarding the desirable, or even obligatory, role of the arbitral tribunal in the settlement process and settlement agreement. This may again depend on the particular rules and law applied.

II. Settlement agreements and arbitration generally

Many of the trappings and prerequisites for a valid settlement agreement in the municipal courts will not apply to settlement in arbitration, whether domestic or international and whether under the ICC Rules or otherwise. Among the differences in nature which may account for differences in practice are (i) the private nature of arbitration, (ii) the confidentiality of many arbitration proceedings, and (iii) the contractual basis for the jurisdiction of the arbitral tribunal.

Most particularly in international arbitration, there will be a frequent disassociation between and among four essential elements: (i) the law applicable to the underlying arbitration dispute, (ii) the law at the place of arbitration, (iii) the arbitration rules agreed by the parties, and (iv) the laws of the different places of possible enforcement of the agreement. Such disassociation can also occur in litigation involving different nationalities and applicable laws. However, in litigation such disassociation will most often still be devoid of the conflict posed by agreement to a set of arbitration rules and to a substantive law different than the laws of the place where the local court is located.

In practice, the multiplicity of different possible laws and fora in international arbitration makes issues of compulsory enforcement even more problematic than in transnational litigation, and hence makes a properly structured settlement agreement all the more important.

A. Arbitral versus extra-arbitral settlement

In arbitration as in litigation, there is essentially the same distinction between, on the one hand, settlements entered into in a hearing with the assistance of the tribunal and, on the other hand, those privately negotiated but subsequently submitted to the tribunal. Likewise, normally only a settlement of an arbitral dispute taking the form of an award is an enforceable instrument, particularly for transnational purposes.

Just as in the case of litigation where an out-of-court settlement may not be an enforceable instrument unless properly deposited with or certified by the court, so in an arbitration an extra-arbitral settlement may have similar limitations. Where such deposit or certification is not available or not employed, a settlement agreement, once breached, may require action and judgement to be enforced. Such action and judgement across borders may pose problems which the original agreement to arbitrate was meant to avoid. This will be the case particularly where disputes arising out of or in connection with the settlement agreement itself are not expressly or impliedly agreed to be subject to arbitration.

B. Tribunal involvement in settlement

Depending on the arbitration rules, the situs and the otherwise applicable substantive and procedural law, the arbitrator may or may not be entitled, or expected, to broach or attempt a settlement in the midst of the arbitration. Where such intervention is possible, as in the case of litigation, it is normally at the discretion of the arbitrator whether to attempt a settlement where there has been no express request to do so by one or all parties.

If the tribunal fails to play such a role, consensual settlement 'outside' of the arbitration would of course be possible. Normally, so would an award [Page24:] on agreed terms in which the tribunal's role might be limited to 'recording' the parties' settlement terms as long as it found such terms to be minimally acceptable under the public policy which it deemed applicable. 2

Local court customs to the effect that a preliminary 'reconciliation' hearing is held immediately after the closing of the pleading phase or that the judge as a rule plays the role of conciliator, whether or not the parties so request, will often be impermis- sible in arbitration proceedings. Invariably, an arbitrator may not make a proposal of settlement without the prior consent of the parties, and arguably he is not allowed to make such a proposal where only one, but not all, of the parties has requested that he do so. 3 Depending on the applicable rules, it may in fact even be considered a trespass for the arbitrator to encourage the parties generally to pursue settlement or to consider involving himself in settlement discussions. 4

C. The subject matter and arbitrability of the settlement

As in the case of litigation, so in arbitration the settlement, whether achieved outside the arbitration or in the form of an award on agreed terms, must be on a matter which is capable of, or amenable to, settlement under the relevant law or laws. The analysis may not be as straightforward in the arbitration context as in the litigation context.

The analysis depends on whether the settlement instrument is to be considered within the realm of arbitration and arbitrability or, rather, solely as a private contract subject to the general analysis of what kinds of party agreements do or do not offend public policy. The outcome of this analysis may also depend on whether or not the instrument is in the form of a consent award and also on which substantive law applies to the validity of the settlement agreement.

Thus in practice a settlement by consent award may be subject to particular arbitrability requirements under (i) the law or at least minimum public policy standards at the situs, (ii) the substantive law applicable to the contract giving rise to the dispute (if different), (iii) the substantive law applicable to the settlement agreement (if expressed to be different than the law governing the contract), and (iv) the substantive law or at least minimum public policy standards at any other place of compulsory enforcement of the consent award.

Alternatively, where the settlement and termination of the arbitration is achieved without a consent award but in a private written instrument, each of the foregoing factors (i)-(iv) might still be relevant. A potential difference might be that the written instrument, instead of containing an express or implied arbitration clause to resolve future disputes as to performance of the settlement agreement, may expressly or impliedly contain a choice-of-forum clause. In that case, disputes arising out of the settlement agreement, or efforts to enforce its terms, would not be subject to any arbitrability review. Rather, they would be subject solely to the relevant local analysis as to whether the agreement was capable of being subject to out-of-court settlement. [Page25:]

D. Effects of settlement on pending arbitration proceedings

Once validly concluded, an agreement settling an arbitration - unlike an agreement settling a court case - is not necessarily considered to be a surrogate for a final and unappealable award. At the same time, the precise effects of the settlement agreement upon the arbitration will depend on the form of the agreement and the applicable law.

An extra-arbitral settlement, i.e., without involvement of any arbitral tribunal, would normally not have the status of an arbitral award, and would not by itself terminate the arbitral proceedings; an additional withdrawal of the arbitration would be required. 5 Such an extra-arbitral settlement might be carried out in a form similar to an out-of-court settlement, and thereby have the same effect, depending on the jurisdiction.

Accordingly, in the European Union context under Article 51 of the Brussels and Lugano Conventions on Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters, such an extra-arbitral settlement could be tantamount to a final judgement as a basis for enforcement, with the effect of res judicata between the parties. 6 Again depending on the jurisdiction concerned, such res judicata effect might equally apply to settlement and compromise of arbitral proceedings only when they are properly court-certified. 7 A settlement with involvement of the arbitral tribunal resulting in a consent award would normally have the same status as an arbitral award, and would, by itself, result in the termination of the arbitral proceedings.

III. Settlement agreements and the ICC Rules of Arbitration

Under the 1988 version of the ICC Rules, which in many instances will still be applicable for some time to come, Article 17 provides:

'If the parties reach a settlement after the file has been transmitted to the arbitrator in accordance with Article 10, the same shall be recorded in the form of an arbitral award made by consent of the parties.'

The provision is to be understood as meaning that the 'settlement' as agreed shall be recorded in an 'award by consent.' 8

Article 17 underwent change in the 1998 version of the Rules in certain not insignificant respects. Article 26 of the 1998 Rules provides:

'If the parties reach a settlement after the file has been transmitted to the Arbitral Tribunal in accordance with Article 13, the settlement shall be recorded in the form of an Award made by consent of the parties if so requested by the parties and if the Arbitral Tribunal agrees to do so.'

A. Kinds of settlement under the ICC Rules

Under both the 1988 and 1998 ICC Rules, the issue of settlement agreements after commencement of an ICC arbitration can take on at least two dimensions: (i) settlement before the file has been transmitted to the arbitrator in accordance with Article 10 or 13 respectively, and (ii) settlement thereafter. 9[Page26:]

In the former case, where either no tribunal is yet constituted or the constituted tribunal has not yet been seized of the file when the parties reach their settlement, there is no occasion for an award by consent. 10

In the second of the two cases, where the tribunal has been seized of the file, an ICC award by consent will be possible. Such an award shall, like any other ICC award, be subject to scrutiny by the ICC International Court under Article 21 of the 1988 Rules or Article 27 of the 1998 Rules, after which the ICC will notify it to the parties. Scrutiny of such an award by consent, like scrutiny of any other ICC award, may offer the advantages of verification and control of possible hindrances to validity at the place of arbitration and to enforceability at one or more putative places of enforcement. 11

B. Freedom of parties to seek awards by consent under the ICC Rules

Under both Article 17 of the 1988 ICC Rules and Article 26 of the 1998 Rules, if the parties reach a settlement it 'shall be recorded' in the form of an arbitral award. Notwithstanding this hortatory language, actual practice under the 1988 Rules suggests that the parties are at liberty not to submit a settlement to the ICC tribunal for it to be recorded. This is consistent with the accepted principle that the parties are free not only to agree to an extra-arbitral settlement without involvement of the tribunal, but also generally to terminate ICC proceedings between and amongst themselves with or without the imprimatur of an extra-arbitral settlement. That awards by consent are to be rendered solely when the parties so request is now made clearer by Article 26 of the 1998 Rules.

One scenario, which arises in practice, might be that the parties agree privately to consider their respective claims and counterclaims (or defences by way of set-off) to offset each other and yield a 'zero-sum' result. In such situation, the parties might conclude that no settlement agreement in the form of an award by consent is needed, on the theory that no issues of future compulsory enforcement of any obligations could arise.

Another scenario where an award by consent might be deemed unnecessary, which likewise arises in practice, is where the settlement agreement is self-executing, with payment of sums due made a condition to the validity of the agreement itself. In many circumstances, however, such an arrangement could be problematic insofar as the full offset is not recorded in a written settlement agreement. If one or more of the parties subsequently does not live up to the agreement, there may be no alternative to compulsory enforcement proceedings after all.

C. Withdrawal of ICC proceedings and awards by consent

Whether the parties record their settlement agreement in the form of an award by consent or otherwise, they will presumably agree to withdraw the pending arbitration and all claims and counterclaims. Depending on when the arbitration is withdrawn, in practice there may be different cost implications for the parties in the context of (i) an award by consent or (ii) a settlement agreement not involving the tribunal.

In the first possible case, no award by consent is possible because the settlement is reached before the tribunal is constituted; nevertheless, some portion of the ICC administrative expenses, if already assessed, may still be owing. 12[Page27:]

In a second possible case, the tribunal has been constituted but the parties do not desire an award by consent; again, some portion of the admi-nistrative expenses and arbitrators' fees may be owing, and the amounts will presumably depend on the extent of ICC Secretariat and tribunal efforts respectively up to that point.

In a third possible case, the parties seek an ICC Award by consent, but do not wish a detailed record of the content and dispositions of their settlement agreement in the award. Practice under Article 17 of the 1988 Rules allows the parties to request that the tribunal 'declare' by award that the arbitration is terminated pursuant to mutual wish of the parties, 13 with administrative and arbitrator's fees to be assessed and the file to be closed thereafter.

Article 26 of the 1998 Rules should work in essentially the same fashion. It differs in fact from its predecessor by requiring that the settlement be recorded in the form of 'an Award,' which in turn is now defined in Article 2(iii) of the 1998 Rules as including 'inter alia, an interim, partial or final Award.' That non-exclusive definition on the one hand clearly allows for inclusion of awards by consent as ICC Awards. On the other hand, it establishes that under the 1998 ICC Rules a simple declaration by the tribunal, made upon request of the parties, of a settlement having been reached in the form of an award results in a full-fledged ICC Award.

The award issued by the tribunal has the effect of acknowledging the parties' desire to settle the dispute by terminating it, but need not stipulate any monetary or other obligations of settlement to be carried out, e.g., under pain of compulsory execution. Article 17 of the 1988 Rules both in word and in practice, 14 and Article 26 of the 1998 Rules, 15 appear to allow for mere declarations of settlement by the tribunal, 16 without any necessary decision on costs or otherwise. Such a decision may be more susceptible of enforcement abroad under, e.g., the 1958 United Nations ('New York') Convention on the Recognition and Enforcement of Foreign Arbitral Awards, than would be a mere declaration, and this consideration may be of great practical relevance in a particular case. Whether the New York Convention even applies to consent awards which merely stipulate the parties' own settlement agreement in the form of a declaration is not entirely clear in theory or in practice. 17

In a fourth possible case, the parties seek and obtain an award by consent with the tribunal's involvement, but the parties play the predominant role in the drafting of the award, without objection of the tribunal, such that the arbitrators' fees may be reduced.

And in a fifth possible case, the tribunal plays the primary role in drafting the award by consent, perhaps at a very late stage of the proceedings, in [Page28:] which case the arbitrators' fees may be virtually as substantial as they would have been had no settlement agreement been drafted in the first place. 18

Finally, it is possible to enter into an award by consent which settles the dispute and pending arbitration only partially. In such case, the arbitration will not yet be brought fully to an end and not yet call for a final disposition of costs and fees. 19

D. Freedom of involvement of tribunal in ICC awards by consent

In practice, the freedom of the parties to settle their disputes pending arbitration is one matter. The freedom of the arbitrators to decline to issue an award by consent in a case where they decline to support the underlying settlement terms is another.

The wording of Article 17 of the 1988 Rules and Article 26 of the 1998 Rules respectively suggests that the parties' settlement must be recorded in the form of an award by consent if they wish such an award. Article 17, but not Article 26, also suggests that the arbitrators have no say in whether and to what extent they may decline to participate in the issuance of such an award. Again, practice in fact dictates that the tribunal is under no obligation to participate in the rendering of, or to sign, an award under Article 17 based on the terms of a settlement agreement which, for whatever reasons, it does not sanction. 20 The right of the tribunal to refuse to render an award on agreed terms is established expressly in certain other rules and legislation. 21 Article 26 of the 1998 ICC Rules makes this clear where it was not clear in the 1988 ICC Rules: '...and if the Arbitral Tribunal agrees to do so.' [emphasis added]

The most obvious example would be an award by consent based on a settlement the terms of which were clearly in violation of a relevant body of public policy. 22 Another example would be a party request to draft an award on agreed terms based on a settlement agreement entered into orally. In the case of such an oral settlement agreement, which occurs more frequently than one might imagine, the risk may increase that the parties are not in unison as to the terms of their oral agreement. In turn, the doubts of the arbitrators may increase as to whether there is indeed agreement on the terms which they then include in their award by consent. 23[Page29:]

E. Scrutiny of the ICC Award by consent

Whether it is a mere declaration, an award on costs, or a full-fledged recitation of mutual obligations with conditions precedent, the award by consent will require scrutiny and approval by the ICC Court. Awards by consent need not be scrutinized in a plenary session of the ICC Court, but rather can be reviewed and approved by a Committee of the Court. 24 On the assumption that an award by consent will normally be meant as a final and not a partial award, it should fix the allocation of costs of the arbitration, as agreed by the parties, pursuant to Article 20.1 of the 1988 Rules and 31.3 of the 1998 Rules.

The ICC Court, in plenary session or in committee session as the case may be, 25 must verify that the terms of the award accurately reflect the prior oral or written settlement agreement of the parties. In this regard, the ICC Court, when called upon to scrutinize the award by consent, may itself have doubts as to the proper basis for the award. Furthermore, it may determine whether those terms run afoul of any relevant applicable law respecting settlement agreements. Moreover, the underlying subject matter of the award by consent should be verified as arbitrable since the validity and enforceability of the award, including for purposes of cross-border exequatur, may otherwise be undermined.

Likewise directly bearing on validity and enforceability, the underlying subject matter of the award by consent must presumably be encompassed within the original agreement to ICC arbitration. The arbitrators will not otherwise have jurisdiction to issue the award by consent in the first place. 26

F. Post-settlement disputes and enforcement issues

There is disagreement as to whether 'conversion' of a settlement agreement into an ICC award by consent, or similar award on agreed terms under other arbitration rules, is required for enforceability of the agreement across borders under bilateral and multilateral conventions.

The issue relates to the nature of the award on agreed terms under different applicable laws and under enforcement conventions. Neither the New York Convention nor the 1927 Geneva Convention, for example, expressly encompasses consent awards or awards on agreed terms. As a result, one view is that whether or not such awards should benefit from Convention bases is a question to be answered through interpretation of the Convention texts themselves. 27 Another view is that this question is best answered through reference to whether the law of the place where the award by consent was rendered regards the instrument as an arbitral award. 28 And yet another distinction which may need to be borne in mind is whether the settlement came about in the context of a party agreement presented to the arbitrators for their imprimatur or rather resulted from an extra-judicial conciliation. 29[Page30:]

Difficulties may be more likely to arise30 particularly in the case of consent awards in which the tribunal plays virtually no role whatsoever, makes no decision respecting any claims or defences or assignation of liability, 31 and essentially issues an instrument in the form of an 'award' doing little more than reiterating the text of the parties' truce. 32

The practical problems which can and do arise in this area can be quite thorny. What if the award by consent contains the terms of a settlement agreement which expressly makes itself subject to ICC arbitration? What if that agreement to ICC arbitration contains defects under, e.g., Article II.2 and/or II.3 of the New York Convention? 33 What if the award by consent contains settlement terms which instead expressly make the agreement subject to a municipal court's jurisdiction which is clearly in conflict with resort to arbitration? What if the award by consent contains settlement terms which say nothing one way or another about ways to resolve future disputes?34

In any one of these cases, which can occur in actual practice with roughly equal frequency, there may be doubts as to the proper course to obtain compliance with the settlement agreement. Indeed, even if the most obvious course would appear to be exequatur action under the New York Convention or a comparable basis, the enforcing party may in fact prefer to resort to the local courts. This may be the case especially if the enforcing party sees possible obstacles on the horizon, especially across borders, to enforcement of the agreement if classified as an award which might not be obstacles to enforcement of the agreement if classified as a judgement.

In any event, in each of these cases there may be particular issues of local enforcement which the creditor must bear in mind to achieve exequatur. One example is § 1044a of the German Civil Procedure Code (ZPO), which was replaced on 1 January 1998 when Germany adopted the UNCITRAL Model Law in replacement of former Chapter 10 of the ZPO. 35 Article 1044a old ZPO was replaced by Article 1053 new ZPO. A settlement on agreed terms drafted in conformity with and subject to Article 1044a - called Schiedsvergleich - is not considered to be enforceable abroad under the New York Convention as an arbitral award - called Schiedsspruch - although it might be enforceable under bilateral convention bases which expressly permit such enforcement. 36

Whether an award on agreed terms results in the invalidity of the prior arbitration agreement is not as clear as some commentators have seen fit to portray it. It must be regarded as correct that the consent award terminates the tribunal's mandate in the same fashion as does an award on the merits. Query, however, absent an express provision to this effect, whether it therefore necessarily invalidates the original arbitration agreement. 37[Page31:]

Indeed, precedents exist to the effect that the arbitration agreement is not - implicitly - deprived of its continuing validity by reason of a subsequent agreement to settle and terminate an arbitration dispute under the contract containing the arbitration agreement. Under such precedents, a dispute arising under such settlement agreement is to be referred to arbitration pursuant to the prior arbitration agreement, even if the settlement agreement itself does not reiterate such prior arbitration agreement. 38

Such precedents exist, notably, in two important centres of ICC and other arbitration: France39 and Switzerland. 40 Moreover, interesting questions of the tribunal's jurisdiction over claims arising out of settlement agreements have arisen under Article 34(1) of the Iran-US Claims Tribunal Rules, particularly in cases where the settlement was conditional upon the performance by one or both parties of certain obligations which were subsequently not honored. 41 It may be a different case, however, where the settlement agreement itself contains a choice of forum or arbitration clause which expressly recites that it supersedes or novates the prior arbitration agreement. 42

More problematic and more often encountered are settlement agreements which contain no such express recitation, but rather a conflicting dispute resolution provision or none at all. In short, vigilance and careful drafting are called for at this stage, as in any other aspect of arbitration proceedings or arbitration agreements.

Conclusion

While settlement agreements are becoming more and more desirable and necessary in international arbitration, there is in fact a host of potential problems which can befall counsel and arbitrators, and which will differ depending on the components of the dispute.

How the ICC Rules, both old and new, approach the issue, and what inquiries need to be made beyond the ICC Rules to ensure a workable settlement agreement, are important questions for both counsel and arbitrator to which the foregoing remarks are addressed.

1
See, e.g., Sanders, 'Het Nieuwe Arbitragerecht,' 4 TvA, August 1984, at 245; see also Schwartz, ICC International Court of Arbitration Bulletin, May 1993, Vol.4/N°1, p. 8-13, to the effect that some 65 percent of all ICC arbitration proceedings end in settlement. See also 1997 Statistical Report, ICC International Court of Arbitration Bulletin, May 1998, Vol. 9/N°1, p. 6, listing the number of ICC arbitration cases withdrawn in the years 1993 to 1997 respectively as 180, 182, 216, 220 and 196; the number of those cases withdrawn prior to the transmission of the file to the arbitral tribunal as 128, 116, 140, 147 and 120; the number of cases withdrawn after transmission of the file to the arbitral tribunal and before the Terms of Reference were transmitted to the ICC Court as 21, 35, 36, 11 and 18; and the number of cases withdrawn after the Terms of Reference had been transmitted to the ICC Court as 31, 31, 40, 82 and 68 respectively. While the reasons for withdrawal are numerous and not always easy to identify, a fair number of such withdrawals were presumably due to a settlement between the parties.

2
A consent award or award on agreed terms is foreseen in various sets of arbitration rules. These include, inter alia, Article 30 of the UNCITRAL Model Law, Article 1069 of the Netherlands Arbitration Act, Article 34.1 of the UNCITRAL ad hoc Rules, and Article 54 of the Netherlands Arbitration Institute Rules. The power to issue such an award also follows from other rules and legislation, even where not addressed expressly, as an agreed extension of the tribunal's general procedural powers: see, e.g., Lalive, Poudret & Reymond, Le droit de l'arbitrage interne et international en Suisse (1989), Article 189, No. 20.

3
Among the bodies of arbitration rules and legislation requiring the joint request of the parties before the tribunal is empowered to issue an award on agreed terms are Article 30.1 UNCITRAL Model Law, Article 34.1 UNCITRAL ad hoc Rules and Article 1069.1 of the Netherlands Arbitration Act. Cf. also Article 26.8 of the LCIA Rules of Arbitration effective as of 1 January 1998, which provides that the tribunal may render an award recording the settlement if 'the parties so request' in writing and that if the parties do not require a consent award, 'then on written confirmation by the parties to the LCIA Court that a settlement has been reached, the Arbitral Tribunal shall be discharged and the arbitration proceedings concluded...' The previous version, Article 16.7 of the LCIA Rules effective from 1 January 1985, allowed the tribunal to render a consent award if 'any party' so requested.

4
Cf. Article 13.4 of the 1988 ICC Rules regarding the related issue of amiable composition: 'The arbitrator shall assume the powers of an amiable compositeur if the parties are agreed to give him such powers.' This provision suggests that such powers may not be exercised absent such agreement nor where only one of the parties makes such a request. However, presumably the arbitrator would be acting within permissible bounds to 'inquire' of the parties whether they wish to grant him such power after only one or some of the parties has expressed such a wish.

5
For the generally accepted notion that the parties must inform the arbitrators of the settlement in order to have the arbitration terminated by a termination order, see, e.g., Article 30.1 UNCITRAL Model Law, Article 34.1 UNCITRAL ad hoc Rules, and Article 45.2 Zurich Chamber of Commerce Arbitration Rules; but cf. Redfern and Hunter, Law and Practice of International Commercial Arbitration (1991), p. 383, for the notion that the parties are not under any such obligation.

6
Kreindler, Transnational Litigation: A Practitioner's Guide (1997), Introduction, p. 231 ff.

7
An award on agreed terms, or 'sentence d'accord-parties' which is subject to French law does not necessarily benefit thereby from any additional quality of finality: under Article 2052 (1) of the French Civil Code, the settlement in form of a 'transaction' already possesses res judicata effect ('l'autorité de la chose jugée en dernier ressort'); see also Fouchard, Gaillard & Goldman, Traité de l'arbitrage commercial international (1996), p. 758, n° 1365.

8
The French- and German-language versions of Article 17 of the 1988 Rules as well as the French version of Article 26 of the 1998 Rules leave room for the interpretation that it is not the settlement agreement - and all of its terms - which is to be recorded in an award, but rather merely the fact that the parties have settled.

9
As set forth in note 1, the 1997 Statistical Report, ICC International Court of Arbitration Bulletin, May 1998, Vol. 9/N°1, lists the number of ICC arbitration cases withdrawn in the years 1993 to 1997 according to cases withdrawn prior to the transmission of the file to the arbitral tribunal, cases withdrawn after transmission of the file to the arbitral tribunal and before the Terms of Reference were transmitted to the ICC Court, and cases withdrawn after the Terms of Reference had been transmitted to the ICC Court.

10
The wording of Article 17 of the 1988 Rules does not in fact expressly forbid the issuance of an award by consent by an arbitrator who is seized with the file shortly after the parties have consummated a settlement agreement but before they have withdrawn the arbitration proceedings. Cf. Reiner, ICC Schiedsgerichtsbarkeit (1989), p. 238, fn. 560. Article 26 of the 1998 Rules allows the same interpretation.

11
See 1997 Statistical Report, ICC International Court of Arbitration Bulletin, supra, note 1, listing the number of ICC arbitration cases concluding in awards by consent in the years 1993 to 1997 respectively as 18, 20, 20, 19 and 33.

12
A general memorandum from the Secretary General of the ICC Court to all parties, counsel and arbitrators as of 1 July 1986, as revised 1 January 1988, issued in relation with modifications to the Schedule of Arbitration Costs (Appendix II to the 1988 ICC Rules) made clear that where a case was terminated prior to the rendering of the award, the full administrative expenses would not be charged (see Appendix III to the 1998 ICC Rules, Art. 2.6).

13
As a matter of local arbitration law, the award by consent, or on agreed terms, may not necessarily need to contain 'reasons' insofar as the arbitrators are merely recording the terms agreed upon by the parties and not rendering a decision on jurisdiction or otherwise on the merits: Article 31.2 UNCITRAL Model Law, Article 34.1 UNCITRAL ad hoc Rules, Article 54.2 Netherlands Arbitration Institute Rules, Article 1069.2(b) Netherlands Arbitration Act; see also A. Bucher, Die neue internationale Schiedsgerichtsbarkeit in der Schweiz (1989), No. 325 for the 1987 Swiss Private International Law Statute in this regard; Berger, International Economic Arbitration (1993), p. 585.

14
Cf. Reiner, ICC Schiedsgerichtsbarkeit, supra, pp. 236-37, contending that solely a decision of the tribunal, and not just a declaration of the fact of the parties' agreement to a settlement, is possible and envisioned under Article 17 of the 1988 Rules. Reiner concedes that such a decision could be confined to one concerning final allocation of costs, and then need not address the underlying merits or assign liability to any party (beyond, if at all, costs).

15
Whether an award by consent under the 1998 ICC Rules is to be considered to be required to state 'the reasons upon which it is based' pursuant to Article 25(2) thereof is doubtful; alternatively, the fact that the award by consent is based on a settlement may itself constitute sufficient 'reasons' to comply with Article 25(2).

16
Cf. Article 34 of the Swiss Inter-Cantonal Arbitration Convention, approved on August 27, 1969 by the Swiss Federal Council (also known as the Concordat), which states: 'Should the parties settle their dispute during the course of the arbitration, and thus bring the arbitration to an end, the arbitral tribunal shall register this settlement in the form of an award.' [unofficial translation]

17
On the one hand, the New York Convention appears intentionally to have refrained from concerning itself with awards by consent: see, e.g., Schwab, Schiedsgerichtsbarkeit, Kommentar (1979), p. 232. On the other hand, query whether awards by consent which limit themselves to a declaration that the parties have settled are in fact arbitral awards in the sense of Article V(1) of the New York Convention: cf. van den Berg, The New York Arbitration Convention of 1958 (1981), p. 49 f. (yes) and Reiner, ICC Schiedsgerichtsbarkeit, supra, p. 239 (no). The UNCITRAL Model Law seeks to remove such doubts by requiring in Article 30 that an award on agreed terms 'shall state that it is an award' and such award 'has the same status and effect as any other award on the merits of the case.' Article 26 of the 1998 ICC Rules may be seen as attempting the same result through its reference to Award as a defined term.

18
Under Article 23.1 of the 1988 Rules and Article 28.1 of the 1998 Rules, the ICC Court is empowered to withhold notification of the award by consent, as in the case of any other award, until the parties have fully paid the 'costs of the arbitration' to the ICC.

19
See, e.g., Award in ICC Case No. 4761 (1984), Note Jarvin, ICC Arbitral Awards 1986-1990, p. 298.

20
Thus the statement that French international arbitration law admits the existence of an obligation on the part of the tribunal to render an award on agreed terms upon a request to this effect by the parties (Fouchard, Gaillard & Goldman, Traité de l'arbitrage commercial international, supra, p. 758, n° 1365) must be read to mean an obligation only within the confines of consent awards which the tribunal members do not consider unacceptable under a minimum public policy standard. Similarly, Article 19.1 of the 1992 Arbitration Rules of the German Institution of Arbitration (Deutsche Institution für Schiedsgerichtsbarkeit, DIS), which are still applicable to certain contracts and proceedings subject to the DIS Rules, must be read to be precatory and not hortatory. Article 19.1 states: 'At every stage of the proceedings the arbitration tribunal shall seek to reach an amicable settlement of the dispute or of individual issues in dispute' [official translation]; but cf. Raeschke-Kessler, 'Der Vergleich im Schiedsverfahren: Anmerkungen zu § 19 DIS-Schiedsordnung,' in Festschrift für Ottoarndt Glossner zum 70. Geburtstag (1994), p. 255 (considering Article 19.1 DIS Rules to impose a procedural 'duty' upon the arbitrator to seek settlement akin to the 'duty' applicable to judges in German civil proceedings). The amended version of the DIS Rules which came into effect on 1 July 1998, in conformity with the replacement of the arbitration provisions in Chapter 10 of the German Civil Procedure Code (ZPO) as of 1 January 1998 by a new law substantially akin to the UNCITRAL Model Law, substantially maintains this provision in new Article 32.1.

21
See, e.g., Article 30.1 UNCITRAL Model Law, Article 1069.1 Netherlands Arbitration Act, and Article 54.1 Netherlands Arbitration Institute Rules.

22
See in this regard Article 1069.2(a) Netherlands Arbitration Act. See also Article 1053.1 of the 1998 German Arbitration Act, which replaced the prior form of award by consent (schiedsrichterlicher Vergleich under Article 1044a old ZPO) and goes beyond corresponding Article 30 of the Model Law by providing that if requested by the parties, the tribunal shall 'record the settlement in the form of an arbitral award on agreed terms [Schiedsspruch mit vereinbartem Wortlaut] unless the contents are in violation of public policy (ordre public)' [unofficial translation]. Articles 32 and 34 of the 1 July 1998 DIS Arbitration Rules, relating to consent awards, represent amendments to the DIS Rules bringing them into conformity with Article 1053.1 of the 1998 German Arbitration Act.

23
Cf. Berger, International Economic Arbitration, p. 585, contending that the right of arbitrators to refuse to render an award on agreed terms should be limited 'to truly blatant cases where the grave violations of mandatory norms or the ordre public international appears clearly and unambiguously from the face of the settlement.' See also Briner, 'Considerations Which May Affect the Procedure,' in Planning Efficient Arbitration Proceedings: The Law Applicable in International Arbitration (1996), p. 373: 'It is obvious that in the context of an award by consent the notion of public policy which has to be respected is that which relates to arbitrability rather than to enforcement as the jurisdiction of the arbitrator can only go so far as the party can authorize him; the lack of arbitrability is indeed a limit of the parties' autonomy and public policy a specific qualification of that limit.'

24
Pursuant to Appendix II, Article 11(a) to the 1988 Rules, 'the Committee is empowered to take any decision within the jurisdiction of the Court, with the exception of decisions concerning challenges of arbitrators, allegations that an arbitrator is not fulfilling his functions and approval of draft awards other than awards made with the consent of the parties.' On the 1998 Rules, see Briner, 'The Implementation of the 1998 ICC Rules of Arbitration,' ICC International Court of Arbitration Bulletin, December 1997, 9.

25
Under Article 4(5)(a) of Appendix II to the 1998 Rules, 'the Court shall determine the decisions that may be taken by the Committee.' The Committee is now empowered to approve finally certain awards, whereas awards which raise 'particular problems or difficulties' will continue to be reviewed and approved at a Plenary Session: Briner, supra, note 24.

26
In ICC arbitrations under the 1988 Rules and, where applicable, under the 1998 Rules, the limits of the tribunal's mandate are defined not only by the parties' arbitration agreement, but also by the Terms of Reference.

27
Fouchard, Gaillard & Goldman, Traité de l'arbitrage commercial international, supra, p. 758, n° 1366.

28
Van den Berg, The New York Arbitration Convention of 1958, supra, p. 50.

29
It has been contended that while an award made by consent in the quasi-judicial process of arbitration may be eligible for recognition and enforcement under the New York Convention, an agreement made by consent as a result of an extra-judicial conciliation should not be. See, e.g., Redfern, 'Enforcement of International Arbitral Awards and Settlement Agreements,' Arbitration, May 1988, p. 127. At the same time, the distinction between the two may not always be crystal-clear, especially in those systems which encourage or even require the arbitrator to reach an 'amicable settlement' of the dispute between the parties and/or to conciliate or mediate during the arbitral proceedings even without an express request to do so by one or more of the parties: see, e.g., Section 21 (Mediation) of the Rules of Maritime Arbitration of the Japan Shipping Exchange, Inc. and Article 37 of the China Maritime Arbitration Commission Rules of Arbitration, discussed in Tashiro, 'Conciliation or Mediation During the Arbitral Process: A Japanese View,' 12 Journal of International Arbitration 119 (1995), p. 124.

30
Except perhaps under the generous definition in Article 30.2 of the UNCITRAL Model Law, which essentially accords full award status even to consent awards in which tribunal involvement is reduced to a bare minimum. Again, Article 26 of the 1998 ICC Rules may in fact achieve the same result, but through more oblique wording.

31
See, e.g., Jarrosson, 'La notion d'arbitrage,' LGDJ, 1987, n° 430.

32
See, e.g., in France Cass. civ., 2e, 7 octobre 1981, Société Guillet et autres c/ Consorts Guillet et autres; Rev. arb., 1984 p. 361; Bull., II, n° 180, p. 117.

33
Article II.2 of the New York Convention provides: 'The term 'agreement in writing' shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.' Article II.3 provides: 'The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.'

34
Under German arbitration law prior to 1 January 1998, one view held that the arbitration agreement in the original contract still applied to any future disputes which might arise out of the settlement agreement settling the first arbitration and resulting in the award on agreed terms: Berger, International Economic Arbitration, supra, p. 587, citing authorities. This is to be distinguished, however, from the question of whether the arbitrators' mandate is terminated with the settlement, or rather continues to the extent it is considered to belong to the arbitrators' duties to decide on the validity of the award on agreed terms.

35
Article 1044a old German ZPO provided: 'Where the debtor in a settlement of arbitral proceedings has subjected itself to immediate compulsory enforcement, the enforcement resulting from the settlement of arbitral proceedings shall take place once the settlement has been declared to be enforceable.' [unofficial translation] Article 1044a ZPO also contained signature and deposit requirements for the award.

36
Thus a German Schiedsvergleich under Article 1044a old German ZPO could be enforced in Belgium under Article 13.2 of the German-Belgian bilateral treaty dated 30 June 1958: BGBl. 1959 II S. 766.

37
For this viewpoint, see Boisséson, Le droit francais de l'arbitrage interne et international (1990), p. 107, n° 131.

38
Against this viewpoint, see Boisséson, Le droit francais de l'arbitrage interne et international, ibid.

39
Decision of the Paris Court of Appeals, 4 March 1986, Cosiac, Rev. arb., 1987.167, note Ch. Jarrosson, and pourvoi denied by Cass. 1e civ., 10 mai 1988, Rev. arb., 1988.639, note Ch. Jarrosson.

40
See, e.g., Cantonal Court of Vaud, 21 September 1993 (domestic arbitration), Bull. ASA, 1995.68, note J.F. Poudret.

41
The answer to the question of whether a dispute arising from such a failure to perform fell under the Tribunal's jurisdiction often differed depending on the provisions of the settlement agreement respecting the satisfaction of the condition. Thus cases where the rendering of the award was made contingent upon fulfillment of the condition might be treated differently from those where payment of the award was made contingent and in turn those where payment was not made contingent upon fulfillment of the condition: see, e.g., International Schools Services, Inc. v. Iran, 10 Iran-US Claims Tribunal Reports 6, 13; see also Varo International Corporation v. Iran, 5-10 Mealey's, C1, C2.

42
See, e.g., the decision in ICC Case No. 3383/1979, JDI, 1980.978, obs. Y. Derains.